Mattel misses second-quarter profit estimates as toy spends slow

Mattel MAT.O missed Wall Street expectations for second-quarter profit on Tuesday as consumers cut back on discretionary spending amid a slowdown in the traditional toy market.

Mattel, which generates most of its revenue from traditional toys such as Hot Wheels cars, is facing weak demand as consumers cut back on classic toys and instead spend more on tabletop and digital games linked to popular online shows and films.

Higher living costs and economic uncertainty have also squeezed household budgets, leading consumers to curb discretionary spending and favor lower-priced alternatives, dampening demand for toys and other non-essential products.

The company logged an adjusted profit of 1 cent per share for the three months ended June 30, compared with estimates of a profit of 4 cents per share. Its advertising and promotion expenses rose 11% in the second quarter.

However, Mattel's second-quarter net sales of $1.12 billion beat analysts' estimates of $1.10 billion, according to data compiled by LSEG.

The Barbie toy maker kept its annual forecasts unchanged and expects adjusted profit between $1.27 and $1.39 per share and net sales growth of 3% to 6%.